If Tesla is your choice, you
might have a hard time finding one after the state Motor Vehicle Commission
today unanimously passed new rules that will limit Tesla's direct sales
business model.

The new rules made more
stringent the need for a franchised dealer, a model that the electric carmaker
says is "anti-Tesla" as the carmaker operates through storefronts that allow
for buyers to purchase directly from the manufacturer.

"The Administration has
decided to go outside the legislative process by expediting a rule proposal
that would completely change the law in New Jersey," the company said in a
statement posted on its corporate website. "This new rule, if adopted, would
curtail Tesla's sales operations and jeopardize our existing retail licenses in
the state. "

The rule is backed by the NJ Coalition
of Automobile Retailers (NJCAR), which bills itself as a non-profit organization serving
franchised new car and truck retailers throughout New Jersey.

A spokesman for the coalition said
today that the Motor Vehicle commission vote had nothing to do with his
organization, but rather was an attempt by the MVC to bring its regulations in
line with state law.

What's more said NJCAR President Jim
Appleton, Tesla's approach is not innovative, but rather, by cutting out the
dealer hurts the consumer.

The independent system of franchisees that operates in New Jersey
promotes price competition because a manufacturer doesn't control distribution
and prices, Appleton said. "It also promotes greater access to warranty claims
and safety recall service, which are both something manufacturers hate."

In its release, Tesla said it was
disappointed in the administration of Gov. Chris Christie, as well as in the
Motor Vehicle Commission for moving ahead with the rule change despite Tesla's
good faith efforts to negotiate a compromise.

For its part, the governor is putting
the blame on Tesla, saying it was up to the carmaker to go through the
legislature in order to change existing law.

"Since
Tesla first began operating in New Jersey one year ago, it was made clear that
the company would need to engage the Legislature on a bill to establish their
new direct-sales operations under New Jersey law," said spokesman Kevin
Roberts. "This administration does not find it appropriate to
unilaterally change the way cars are sold in New Jersey without legislation and
Tesla has been aware of this position since the beginning."

But a Tesla official disputed the
governor's assessment of its past relationship with the administration.

"The
statute in New Jersey plainly allows Tesla to be licensed to sell cars there,"
said Diarmuid O'Connell, Vice President of Business Development at Tesla.
"Indeed, the Motor Vehicle Commission has licensed Tesla under that statute
ever since October 2012, and any suggestion that Tesla was told 'since the
beginning' about any problem with its ability to be licensed there is false.
The only thing that has changed is the Christie Administration's sudden
decision to go around the Legislature in an attempt to enact a rule that the
statute doesn't permit. Worse, it has done so without any reasonable notice or
even a public hearing."

This is not the first battle Tesla has fought
over its direct sales model. The concern among car dealers is the
elimination of the dealer model could mean that any manufacturer could set up a
retail location – much as Tesla has done in Short Hills and Paramus – and sell
its cars directly to consumers, cutting out the middleman and any associated
dealer costs.

As with any battle involving
politics, money has flowed on both sides. NJCAR spent upwards of $150,000 on
lobbying efforts last year and dozens of individual car dealers and dealership
groups donated heavily to the governor.
In all, Christie received more than $60,000 in donations from
dealerships. At east $40,000 of that
amount came in the general election when the governor accepted state matching
funds, so each dollar was worth $3 in the governor's coffers.

Tesla has hired Christie-
confidant Roger Bodman of Public Strategies Impact to lobby on its behalf. There is no record of any political donations
by the company.

A spokesman for Tesla said
the company was not yet prepared with a statement on the passage of the new
rule.